By DAVID W. CHEN

Published: January 1, 2004

Kenneth R. Feinberg looks more fatigued than he did two years ago, when he agreed to work free as the administrator of the federal program to compensate the eligible relatives of Sept. 11 victims. The job, he now says, was ''by far the most difficult assignment'' of his legal career.

But if he has worked almost nonstop, getting only three or four hours of sleep a night, Mr. Feinberg is not complaining now: 97 percent of all eligible families have agreed not to sue the airlines, government agencies or other entities and have filed death claims with his program. To date, those claims have paid an average of $1.8 million per family.

And yet, in his first public evaluation of the program, known as the Sept. 11 Victim Compensation Fund, Mr. Feinberg painted a mixed portrait of this novel and wide-ranging government effort.

He said the Congressional statute that authorized his program had several deficiencies, including vagueness over who was eligible to file, and who in the individual families was entitled to collect the award.

The statute suffered from two conflicting impulses: to follow the standards of lost future income typical in tort cases, while at the same time making the fund fair to all income groups, Mr. Feinberg said. He ultimately devised the program to prevent it from favoring the wealthy over the financially disadvantaged, he said.

Similarly, Mr. Feinberg said recipients may have been unreasonably penalized by the government's decision to deduct from the awards the life insurance payouts and other financial safeguards that some families had taken.

''I am still undecided, assuming we do it again: should the details and rules be different?'' Mr. Feinberg said in an interview on Tuesday at his law firm's Manhattan office. ''It's one thing to tell a stockbroker's widow you're going to get $2 million, and another stockbroker's widow is going to get $3 million because she didn't have $1 million worth of life insurance. So the taxpayer subsidizes the difference. I mean, talk about fueling emotional divisiveness.''

The success in attracting so many families was not apparent until an 11th-hour surge of applications. One-third of the 2,884 death claims and more than half of the 4,185 injury claims were filed in December. Mr. Feinberg said the surge was due largely to deadline pressure, strong word-of-mouth among applicants that the awards were fair and generous and the unwavering support of Attorney General John Ashcroft.

Mr. Feinberg promised a fuller accounting of his views when his program finishes processing the claims by mid-June. His views are likely to carry substantial weight concerning the lessons or compensation models that could apply to future terrorist attacks.

In November 2001, Mr. Feinberg, a Washington lawyer, was appointed by Mr. Ashcroft to be special master of the fund, which Congress created in the days after the terrorist attacks as part of an airline bailout package. Families were asked to waive their right to sue the airlines and other entities. In exchange, they would receive a tax-free $250,000 payment for every death, and more money depending on a family's economic loss from that death, minus the deductions for benefits like life insurance and workers' compensation.

In many ways, Mr. Feinberg was both an odd choice and the natural choice for the job. Odd, because of his political credentials as a former chief of staff for Senator Edward M. Kennedy, and as someone who was considered for the position of White House counsel in the Clinton administration. A natural, because of his extensive experience in mediating complicated compensation disputes, including those that arose over the Agent Orange defoliant used in the Vietnam War and the Dalkon Shield birth control device.

One month after his appointment, Mr. Feinberg issued draft regulations outlining the mechanics of the fund, relying chiefly on Deborah E. Greenspan, a partner in his firm, the Feinberg Group; Phil Perry, then acting associate attorney general at the Department of Justice; Jay Lefkowitz, who was general counsel of the White House Office of Management and Budget; and John Wood, deputy associate attorney general at Justice at the time.

But after families and elected officials criticized the regulations as stingy, Mr. Feinberg and his core advisers made significant changes in the final regulations, which were issued in March 2002, to increase the payments. From that point on, Mr. Feinberg worked tirelessly to persuade families to apply to the fund, convening hundreds of meetings large and small all over the country (and in Britain), from the ballroom of the Marriott Marquis in Times Square to the basement of his Midtown offices.

In the end, he said that although he had expected many people to file at the last minute, he was surprised by the sheer volume of those filings. Equally telling, he said, was the fact that 40 people who had originally filed lawsuits against the airlines decided to file with the fund at the last minute, reducing the number of lawsuits to 39.

That means that of the 2,976 eligible families, at last count only about 50 had failed to file either a lawsuit or a claim.

The statistics, Mr. Feinberg said, give him a ''tremendous sense of personal satisfaction'' in validating the fund as ''a dramatic and stunning success.'' But because of the unique nature and emotional complexity of the Sept. 11 tragedy, he cautioned that the program should not be viewed as a template for future attacks, and certainly not ''as an end run around the tort system.''

Mr. Feinberg said he expected the program ultimately to cost $5 billion. He said he also did not expect the average payment of $1.8 million (with a high of $6.995 million) or the median payment of $1.4 million to deviate much.

Although he repeated his earlier assertions that the fund has no cap on high-income earners, he did say that he had tried to make the program more equitable, regardless of whether a victim was a firefighter, a dishwasher or a stockbroker.

''I don't think that Congress intended 15 percent of the people to get 85 percent of the money,'' he said.

After the program ends, Mr. Feinberg, 58, said, he has no plans other than to return to his private practice in Washington. But lawyers say his name often comes up when people speculate about candidates for federal judgeships or senior positions at the Justice Department.

Wherever his career takes him eventually, Mr. Feinberg said he will never forget the personal, often heartbreaking meetings with family members, and the chilling realization of the ''incredibly random nature of death'': a wife explaining that her husband had never set foot in the World Trade Center until that fateful day; a husband noting that his wife was eight months pregnant when she died.

''I'll never be the same again,'' Mr. Feinberg said. ''I'll tell you that.''

Photo: Kenneth R. Feinberg said he had tried to make Sept. 11 aid more equitable: ''I don't think that Congress intended 15 percent of the people to get 85 percent of the money.'' (Photo by Nicole Bengiveno/The New York Times)